All You Need To Know About Personal Loans For A Financial Emergency

There are many situations in life where you might find yourself facing a financial shortfall when faced with unexpected expenses. While you may be able to fall back on your family or friends to bridge the gap in your resources, 

it may not always be a dependable alternative. There may be situations where everyone around you is also strapped for cash. What do you do in times like these? 

This is where taking a personal loan may be the easiest, simplest, and quickest solution to get the required funds into your bank account. What are the situations where you may need to apply for a personal loan?

Situations where a personal loan can come in handy

In the context of the Covid-19 pandemic, innumerable people have had to face job losses, salary cuts, or furloughs. This has resulted in people having to dip into their savings to meet their expenses, whether it is house rent or home loan EMI, daily groceries or education fees for the children. However, savings do not go on forever and it can be an even more challenging situation if you don’t have much of savings to fall back on either. A personal loan can come in handy at times like this.

You may also find a personal loan useful when faced with a medical emergency, especially if you don’t have a health insurance policy to cover the bills or even if you do, but the sum assured is not enough to pay the entire bill. In times like this, a personal loan can be a quick way to settle the gap between your insurance sum assured and the final hospital bill. 

A personal loan can also be used to fund your dream vacation or your destination wedding. It can be used to buy the latest gadget, finance a much-needed home renovation project, meet the expenses of a relocation, or even go for higher studies. You can also use a personal loan to consolidate all your other debts or even your credit card outstanding amount, if the interest rate is higher for those. In fact, the number of ways in which you can put a personal loan to good use are endless.

Advantages of a personal loan 

Personal loans have several advantages such as: 

High quantum of loan: You can get a higher loan amount depending on your meeting the eligibility criteria for the specific lender you are applying for. If you have a high credit score, you can be sure of getting a higher amount or even a lower interest rate. There are certain Non-Banking Financial Companies (NBFCs) where you can get a personal loan of up to Rs.25 lakh depending on your meeting the eligibility criteria. 

Quick disbursal of funds: In the era of paperless and digital applications, KYC, and processing, the time it takes between applying for a personal loan and it getting disbursed into your account is shrinking day by day. When in a high-stress situation where you need funds instantly, a personal loan can be a savior as you can get it as quickly as within 24 hours, as per the lender’s processes. 

Hassle-free processing: Banks and NBFCs have now moved over to a digital process which means everything from the application to uploading of your KYC documents can be done online without having to even visit the office of the lender. This can make it convenient to get the funds you need in an emergency when you are strapped for time and can’t make it to the office of a bank or NBFC to apply for a loan.

No collateral required:  Personal loans are unsecured loans which means you do not have to furnish any security or collateral to be eligible for the loan. This makes it easier and quicker to get the loan you need without having to run around looking for a security or collateral to furnish for a loan. 

Flexible repayment tenures: Personal loans often come with repayment tenures of up to 5 years which means you have more than enough time to pay off your loan. Remember that the longer your loan repayment tenure, the lower will be your Equated Monthly Instalment (EMI).  

Foreclosure: You can make foreclose your loan by making payments in full or part after a certain number of EMIs have been paid. This means that anytime you have extra funds, you can use it to close your loan and save on paying interest, even though you may have to pay a prepayment penalty for it. 

Fixed interest rate: Personal loans come with fixed interest rate which can be a good thing as the EMI remains the same every month, which makes it easier to plan your monthly budget. 

All of these reasons make a personal loan a smart choice in times of a financial emergency.